A living wage law imposed on companies with city contracts would “cripple” New York’s economy, a city official warned.

The Living Wage Council, whose plan has the backing of a majority of city lawmakers, would require developers receiving city subsidies of $100,000 or more to pay $10 an hour salary plus benefits, or $11.50. The $10 figure is 27.5 percent higher than $7.25 an hour minimum wage set by the state Labor Department.

“Ten dollars an hour as a minimum may be OK for the employer with a company in Manhattan, but for a small business in the outer boroughs it is likely too much,” said David Lombino, executive vice president of the New York City Economic Development Corporation (EDC).

While the Bloomberg administration opposes the bill, supporters say it represents economic justice.

“This is merely an attempt to bring fairness to jobs in New York that receive money from the city government,” said the bill’s primary sponsor, Councilman G. Oliver Koppell (D-Bronx). He adds that $10 is not really a living wage in New York City. However, it was used, Koppell adds, because it is what was established by the city for home health-care workers.

But Lombino says the idea of government setting wages is spooking would-be employers. He gave the recent rejection of the Kingsbridge Armory Mall plan as an example of why the living wage concept is flawed. He noted the project was scuttled by the City Council because there was no guarantee that all jobs would pay $10 an hour or more.

About half of the jobs would have been minimum wage, or about $2.75 an hour less than a living wage standard. That’s a sore point with those who favored the project.

“The other half would have been higher than the living wage. That would have lowered unemployment and also raised the overall wage level in the borough,” according to Lombino.

Still, Koppell, whose 11th council district covers parts of Kingsbridge, Riverdale and Woodlawn, said the Kingsbridge developer “was never really interested in the project.”

Advocates of the living wage plan say the concept has worked in Pittsburgh, Los Angeles and other places. The living wage movement goes back at least to the 1990s and has the strong backing of ACORN and unions.

Richard Sander, a UCLA economist who describes himself as a progressive Democrat, studied the effect of a narrow living wage law in Los Angeles. He said most of its costs were higher than estimated and ultimately were borne by the taxpayers and consumers in the form of higher costs and prices.

Vendors raised prices to comply with the law. And the city had to hire more people to ensure that the law was obeyed, according to Sander.

But EDC’s Lombino said the New York City law would be bigger than in other places. He contends “there’s not a single city in the country that wants to go as far as what they are proposing to do here.”

Lombino added that the concept has been tried in small segments of a city economy, but it has been never applied to an entire municipality.

Koppell said the idea is effective in stages and that it doesn’t have to be used in every case of a contractor accepting city money.

“It’s unfortunate that people are rejecting this out of hand. We’re willing to negotiate this,” Koppell said. He added the city’s economy is in good shape and that national chains are vying to move into the city.

The city’s unemployment rate currently stands at 9.3 percent, which is slightly lower than the national average of 9.6 percent. The Bronx has the highest jobless rate at 13.2 percent, while Manhattan has the lowest at 8.4 percent.

Lombino argued that the City Council should delay a vote on the plan until a city study can be completed. He says the study, by Charles River Associates of Boston, should be ready by March.

But Koppell and his City Council allies say the study has a predetermined outcome.

“That study,” Koppell warned, “will be biased against the living wage plan. However, out of courtesy, we will wait until the report is completed.” He doesn’t anticipate a vote on the measure until March.

“We’re undertaking the most comprehensive study to date on the effect of wage restrictions on development projects,” Lombino said. “And we’ve taken great pains to make it an inclusive, non-partisan process with a balanced group of stakeholders that will have an opportunity to contribute to it. It’s not surprising that those who already have a clear bias would object to an impartial study.”

But study or no study, will the measure become law?

Koppell said he already has enough votes in the 51-seat council to pass it. He says the bill now has 28 supporters. “But there are a number of people who are also considering joining us,” according to Koppell.

Both critics and proponents of the plan agree that the fate of the bill depends on whether City Council Speaker Christine Quinn backs it. Lombino also said it is likely that, if passed, Mayor Bloomberg would veto the bill.

Koppell conceded that if the speaker opposes the living wage bill it will likely never pass or even come to a full council vote.